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2. Marijuana Should Be Taxed and Regulated Because It Is America’s Largest Cash Crop
In 2006, ABC News reported that with “a value of $35.8 billion, marijuana exceeds the combined value of corn ($23.3 billion) and wheat ($7.5 billion).” That number came from a report published by Jon Gettman, director of the Coalition for Rescheduling Cannabis. Gettman arrived at this figure by multiplying the estimated number of metric tons of marijuana cultivated in the U.S. in 2005 (10,000 tons, or 20 million pounds) by a production value of $1,600 per pound.
Drug law reformers claimed Gettman’s report was evidence that eradication and enforcement efforts had failed. In the intervening years, however, the statistic has been used to make the case that taxing and regulating marijuana would solve many of America’s fiscal woes. The former argument is a sound one, the latter is not.
Here’s why: Gettman’s estimate of $1,600 per pound was conservative when compared to law enforcement agencies, which in 2005 cited the street value of marijuana at between $2,000 and $4,000 a pound. Marijuana cultivated in a post-prohibition market, however, would cost a fraction of that.
“To get a sense of the disparity in price between legal and illegal drugs,” Reason's Jacob Sullum wrote in 2007, “compare the production value of marijuana—about $1,600 per pound, by Gettman’s estimate—to the production value of tobacco, a legal psychoactive weed that U.S. farmers sell for less than $2 per pound.”
Let’s go back to 2005, make marijuana legal, and give it an astronomically high production value of $800 per pound, or half of Gettman’s black market estimate: It would have tied with soy beans in 2006 as America’s third largest cash crop, with an average production value of roughly $17 billion. If it had the same production value per pound as tobacco, or $2, its APV in 2005 would have been $44 million; or less than 10 percent of beans, 2005’s 20th most valuable cash crop.
So while pointing to marijuana as America’s largest cash crop is a good indicator of its popularity (and arguably, the safety of its use), it doesn’t follow that taxation and regulation of the drug in a post-prohibition market would be an unlimited boon to government coffers, especially when factoring in the costs of an aggressive regulatory framework.
NEXT: Marijuana should be legal because it’s medicine.